An exceptionally volatile week, marked by wide intraday price swings, whipsawed investors with stocks ending higher following a surge to the upside on the final trading day of the week.
The Standard & Poor’s 500 gained 0.77% (down 7.01% YTD), while the Dow Jones Industrial Average rose 1.34% (down 4.4% YTD). The Nasdaq Composite index ended flat (+0.01%) for the week (down 11.98% YTD). The MSCI EAFE index, which tracks developed overseas stock markets, declined 3.54%.1,2,3
The 10-year Treasury Note ended at 1.78% which is up 0.26% YTD.
This week I am noticing Real Estate is down 9.46% already this year. Last year the industry gained 38.99% and the sector fund gained 46.08% - second only to Energy in 2021. If you are invested in any residential or commercial real estate funds, REITS, or own companies that make most of their money in real estate, I recommend you sell now before you give back even more of last year's gains. Some specialty REITs focused on particular industries may hold their value better than the rest of the sector, so give me a call if you are not sure about a particular holding.
If you are holding any growth oriented ETFs or mutual funds, make sure to balance those with value oriented funds and consider switching mostly to value in IRA, 401(k) or Roth accounts.
Rising bond yields, Federal Reserve uncertainty, and escalating tensions on the Ukrainian-Russian border unsettled markets all week. The week opened with two successive days of deep early losses that were erased by furious, late-afternoon rebounds. The following two-trading sessions that started with strong gains that evaporated with late-session selling.
The most dramatic session was Monday, in which stocks ended slightly higher after hitting iresidential ntraday lows that saw the NASDAQ fall 4.9%, the Dow shed 1,115 points, and the S&P 500 moved into correction territory. Technology was at the epicenter of the volatility all week as rate fears weighed on sector. Stocks rebounded strongly on Friday, managing to conclude a week on an upbeat note.4
Fed Readies Market for Rate Hikes
Last week’s meeting of the Federal Open Market Committee (FOMC) left rates unchanged, though officials signaled short-term rates would likely be raised at its next meeting in March. As expected, the Fed also approved one last round of bond purchases, bringing quantitative easing to an end by March.5
Left a bit more nebulous were details on the pace and timing of reducing the Fed’s balance sheet, a lingering worry of some investors. But Fed Chair Powell indicated that shrinking the Fed’s asset holdings may occur at a faster rate than in past periods of balance-sheet reductions, such as in 2014 and 2017.6
This Week: Key Economic Data
Tuesday: ISM (Institute for Supply Management) Manufacturing Index. JOLTS (Job Openings and Labor Turnover Survey).
Wednesday: ADP (Automated Data Processing) Employment Report.
Thursday: Factory Orders. Jobless Claims. ISM (Institute for Supply Management) Services Index.
Friday: Employment Situation.
Source: Econoday, January 28, 2022
This Week: Companies Reporting Earnings
Tuesday: Alphabet, Inc.(GOOGL), Advanced Micro Devices, Inc. (AMD), Exxon Mobil Corporation (XOM), PayPal Holdings, Inc. (PYPL), General Motors Company (GM), Gilead Sciences, Inc. (GILD), Starbucks Corporation (SBUX), United Parcel Service, Inc. (UPS), Stanley Black & Decker, Inc. (SWK).
Wednesday: Meta Platforms, Inc. (FB), AbbVie, Inc. (ABBV), Qualcomm, Inc. (QCOM), Thermo Fisher Scientific, Inc. (TMO), Spotify Technology (SPOT), TMobile US, Inc. (TMUS), D.R. Horton, Inc. (DHI).
Thursday: Amazon.com, Inc. (AMZN), Ford Motor Company (F), Snap, Inc. (SNAP), Eli Lilly and Company (LLY), Fortinet, Inc. (FTNT), Skyworks Solutions, Inc. (SWKS), Honeywell International, Inc. (HON), Prudential Financial, Inc. (PRU).
Friday: Air Products and Chemicals, Inc. (APD), Bristol Myers Squibb Company (BMY).
Source: Zacks, January 28, 2022
“A very great vision is needed, and those who have it must follow it as the eagle seeks the deepest blue of the sky.”
– Tȟašúŋke Witkó (Crazy Horse)
Natural Disasters Have Tax Implications, Too
No one likes to think of natural disasters and what might happen, but it’s always good to be prepared. A few things may happen after a disaster when it comes to taxpayer relief.
The first is that the IRS may give taxpayers more time to file and pay. If your address is in an area qualifying for IRS disaster relief, you will automatically receive more time to file your return and pay taxes.
In addition, taxpayers may qualify for a casualty loss tax deduction for people who have damaged or lost property due to a federally declared disaster.
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov7
A Healthy Side
Think you can’t enjoy good flavor while also prioritizing eating healthy? Think again! This cauliflower “mac and cheese” is delicious, decadent, and easy to make.
Tip adapted from Tasty8
Two children are born in the same hospital (and in the same hospital room) in the same year, month, day, and minute. They have the same two parents, yet they are not twins and have no brothers. How is this possible?
Last week’s riddle: A woman sailed into the Bahamas with her boat on the 28th of April. She stayed in the Bahamas for three weeks and then left in April. How is this possible? Answer: The name of her boat is April.
Woman walking with friend (Canis lupus familiaris), White Sands National Monument, New Mexico.
Footnotes and Sources
1. The Wall Street Journal, January 28, 2022
2. The Wall Street Journal, January 28, 2022
3. The Wall Street Journal, January 28, 2022
4. CNBC, January 24, 2022
5. The Wall Street Journal, January 26, 2022
6. The Wall Street Journal, January 26, 2022
7. IRS.gov, September 7, 2021
8. Tasty.co, September 30, 2021
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Weekly Market Insights: Volatile Week Ends On Rebound
January 31, 2022